Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — CSFB Energy Conference 2004
32 slides from Norsk Hydro Asa's conference presentation, June 2004
Slide 1: Hydro creates a more viable society - CSFB Energy Conference
David W. Nunn, Senior Vice President Corporate Portfolio Strategy Hydro creates a more viable society by developing natural resources and products in innovative and efficient ways CSFB Energy Conference June, 2004 50136_1 • Hydro Media • 06.2004 • 1
Slide 2: Hydro – A dynamic 99 year old!
Hydro – A dynamic 99 year old! Demerger and separate listing March 25th 2004 Europe’s leading integrated World’s leading producer aluminium company of plant nutrients Second largest oil and gas producer in Norway Technologically advanced 50136_1 • Hydro Media • 06.2004 • 2
Slide 3: The energy portfolio
The energy portfolio Oil Gas Power Production - Consumption - Trading Oil** production Gas production * Power 394 000 boe/d 7.8 bcm generation*** (136 000 boe/d) 7-11 TWh Gas consumption* Power 3.0 bcm consumption* 22 TWh Gas sales* Power sales* * 2003 (incl. Yara) ** incl. NGL 12 bcm 18 TWh *** Nor
Slide 4: Overview of group financials 2003
Overview of group financials 2003 (proforma ex. Yara) Revenues (MNOK) Operating income (MNOK) 2456 O&E 54831 Aluminium 68996 21143 Total group revenues: MNOK 133.761 Total group op.income: MNOK 21.625. Earnings after tax (MNOK)** Average capital employed (MNOK) 2029 43415 42940 6977 Total group earn
Slide 5: Income from continuing operations
5 Income from continuing operations* Per quarter NOK million Gains from divestments 3 500 3 100 3 135 2 991 3 000 2 500 2 342 1 851 2 005 2 000 1 809 1 500 1 417 1 000 500 241 0 2002 2003* 2004 Accumulated 7 100 8 656 3 135 * Including the effect of change in accounting principles for 1st quarter 20
Slide 6: Safety
6 Safety Reported injuries per million hours, Hydro employees 25 20 15 10 5 0 1997 1998 1999 2000 2001 2002 2003 LTI - Lost time injuries RWC - Restricted work cases MTC - Medical treatment cases VAW included from August 2002 50136_1 • Hydro Media • 06.2004 • 6
Slide 7: Financial solidity – benefits for shareholders
7 Financial solidity – benefits for shareholders 0.7 0.60 5% dividend increase 0.6 New share buy back scheme 0.5 initiated (5 mill. shares) 0.4 0.38 0.34 0.3 0.18 0.2 0.1 0 2001 2002 2003 2004 Interest-bearing debt + Net pension liability (tax adjusted) + Operating lease commitments (discounted) - C
Slide 8: ROACE development
8 ROACE development (proforma continuing operations) Percent Normalized Actual Normalization assumptions: Oil price: $18/bbl 8.2 Aluminium LME: $1500/t 7.3 7.0 NOK/$: 8 5.8 5.4 NOK/ €: 7,60 (8 from 2004) 4.0 2001 2002 2003 50136_1 • Hydro Media • 06.2004 • 8
Slide 9: Significant profitability improvements targeted
9 Significant profitability improvements targeted Normalized ROACE, percent 8.5 7.5 5.8 5.4 Higher volumes Cost improvements 4.0 Capital discipline 2001 2002 2003 2006 50136_1 • Hydro Media • 06.2004 • 9
Slide 10: Aluminium
Aluminium 50136_1 • Hydro Media • 06.2004 • 10
Slide 11: Global Integrated Players 2003
Global Integrated Players 2003 Alumina Primary Metal Rolled Products Extruded Products 8 7 Mill. tonne aluminium equiv. 6 5 Spin-off 4 0,1 Core Alcan 6,9 0,1 3 2 2,3 3,5 3,3 3,1 1 1,8 1,5 0,8 0,9 0,7 0,9 0,6 0 0,2 Alcoa Alcan Hydro Alcoa; Alumina figures include the 40% part owned by Alumina Limited
Slide 12: A unique portfolio composition
A unique portfolio composition 1 000 tonnes Alumina *) 780 690 Equity Long term contracts Electrolysis metal 1470 Equity Metal products 1470 260 1600 Equity 3rd party Remelt primary alliances Downstream 890 570 60 Castings Rolled **) Extrusion & Automotive * Aluminium equivalents (2 tonnes alumina p
Slide 13: Profit level for the industry
13 Profit level for the industry CROGI proxy* 14% 12% 10% 8% Alcoa Alcan 6% Hydro Al. 4% 2% 0% 1998 1999 2000 2001 2002 2003 2004 1 Q *EBITDA less reported tax/Gross investment, Hydro Aluminium are reported figures Source: Annual and quarterly reports, Hydro-estimates 50136_1 • Hydro Media • 06.2004
Slide 14: Downstream segments
14 Downstream segments Extrusion Rolling Automotive North America Revenue: NOK 12.4 bn Revenue: NOK 17.8 bn Revenue: NOK 7.6 bn Revenue: NOK 4.5 bn Above profit target Below profit target Below profit target Below profit target Selective growth Improve cost Gap to be closed through Gap to be closed
Slide 15: Aluminium – priorities
15 Aluminium – priorities Relentless focus on cost reductions throughout the value chain Improve relative cost position for primary aluminium production Strengthen our unique portfolio profile Metal products, extrusion value chain, selected rolled segments 50136_1 • Hydro Media • 06.2004 • 15
Slide 16: Oil & Energy
Oil & Energy 50136_1 • Hydro Media • 06.2004 • 16
Slide 17: Strong production growth
17 Strong production growth 1 000 boe/day 8% average annual growth 700 600 500 400 300 200 100 0 1998 1999 2000 2001 2002 2003 2004E 2005E 2006E 2007E Norwegian fields Oil, international Gas 8% CAGR* * Compound Annual Growth Rate, 2001 baseline 50136_1 • Hydro Media • 06.2004 • 17
Slide 18: New fields on stream 2004 – 2007
18 New fields on stream 2004 – 2007 Hydro share boe/day Dalia 22 000 International Kharyaga 15 000 (phase 1- 2+3 3) 6 000 (A + D Murzuq field) Rosa 13 000 NCS non-operator NCS operator Ormen Lange 70 000 Oseberg 14 000 Vestflanken Oseberg 7 000 Sør J Visund gas 18 000 phase Kvitebjørn 25 000 Kristin
Slide 19: Improved efficiency in operations
19 Improved efficiency in operations Production costs per barrel NOK/boe 25 26 24 24 24 23 23 23 21 20 20 17 17 2001 2002 2003 2004 Annual average: 24.1 22.6 20.7 50136_1 • Hydro Media • 06.2004 • 19
Slide 20: Oil & Energy – investments
Oil & Energy – investments NOK billion 15 Acquisition of SDFI *) 2005 – 2006 NOK 11–14 billion 12 9 6 3 0 2001 2002 2003 2004E * State Direct Financial Interest 50136_1 • Hydro Media • 06.2004 • 20
Slide 21: Longer term production growth
21 Longer term production growth Existing portfolio 1000 boe/day 700 Development projects Increased oil recovery 600 500 400 Exploration 300 200 Acquiring resources 100 0 2003 2007E Future 50136_1 • Hydro Media • 06.2004 • 21
Slide 22: Existing portfolio
22 Existing portfolio Additional potential from technical resources Kharyaga Russia Canada Hebron Murzuq B Dahra/Garian Annapolis Libya GoM Lorien Norway Acasia Tulipa Angola Anturio Rosa/Lirio/Cravo Orquidea/Violeta Discoveries to be developed Plans for optimized production Oseberg Troll Ormen Lang
Slide 23: Exploration
23 Exploration Growth from a focused portfolio Pursue low risk infrastructure- CAVE technology led-exploration Murzuq, Libya Oseberg Moderate risk exploration focused to proven prospective regions NCS 18th round GoM Lease Sale 190 Adding new frontier prospective acreage Barents sea Morocco 50136_1 •
Slide 24: 21 billion barrels to discover ...
21 billion barrels to discover ... Barents Sea - 6.2 billion barrels High risk – high potential Oil-play potential Norwegian Sea – 7.7 billion barrels High risk – medium/high potential North Sea – 7.5 billion barrels Moderate risk – smaller structures High value per barrel Source: NPD 50136_1 • Hydr
Slide 25: Acquiring resources
25 Acquiring resources Assessing the deal flow: Medium and small players with high exposure and Norwegian limited technology Continental Shelf National Oil Companies in need of assistance to Russia develop operator North capabilities America North Africa Majors optimizing their portfolios Middle Wes
Slide 26: Operator
Explore Design Execute Operate An experienced world-scale offshore producer 1000 boe/day Production 2003 1000 900 800 700 Offshore operator production oil and gas, boe/day * 0 500 000 1 000 000 1 500 000 2 000 000 600 Statoil Shell 500 Petrobras 400 BP Hydro Operator 300 ExxonMobil Equity Woodside 2
Slide 27: Core competencies
27 Core competencies E&P value chain Explore Design Execute Operate • Advanced seismic • Advanced wells • Large and complex • Commissioning and acquisition, projects start-up • Reservoir management processing and • Modifications • Offshore operations interpretation • Sub-sea development • Satellite
Slide 28: Expanding gas activities in NW Europe
Expanding gas activities in NW Europe Actions taken Danish Supply Mærsk supply agreement UK Supply Dutch Supply Duke’s European portfolio Emden Bacton HydroWingas NBP TTF Zeebrugge HUB Note: HUB, TTF and NBP are the marketplaces at Zeebrügge, in the Netherlands and in the UK, respectively 50136_1 •
Slide 29: Growing equity gas production
29 Growing equity gas production bcm Uncommitted volumes Mainly directed 12 to the UK 10 Uncommitted 8 volumes Continue to develop a 6 strong and balanced customer portfolio 4 Existing long term 2 commitments (expected off-take) 0 2003 2004 2005 2006 2007 Illustrative production buildup 50136_1 • Hy
Slide 30: Oil & Energy – priorities
30 Oil & Energy – priorities Continue to meet ambitious cost and production targets Continue first-class project execution Ormen Lange Pursue longer term growth opportunities where we can add value Capital discipline Enhance value of our gas in the European market 50136_1 • Hydro Media • 06.2004 • 3
Slide 31: Summary
31 Summary Strong value creation for shareholders New share buy back scheme implemented Strong balance sheet Will continue to pursue value creating opportunities in both our business areas 50136_1 • Hydro Media • 06.2004 • 31
Slide 32: Forward-Looking Statements/ Use of Non-GAAP Financial Measures
32 Forward-Looking Statements/ Use of Non-GAAP Financial Measures In order to utilize the “safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995, Hydro is providing the following cautionary statement: This presentation contains certain forward-looking stateme